US ETH ETF approval puts pressure on Korean regulators
Korean regulators are pushing to approve cryptocurrency exchange-traded funds (ETFs) following the United States Securities and Exchange Commission's (SEC) recent approval of Space Ethereum ETFs.
According to local media, the SEC's decision regarding Ethereum is expected to put pressure on Seoul's financial regulators to reconsider their position on digital assets.
The SEC has greenlit the creation of an ETF for Ethereum, the world's second largest cryptocurrency, on May 24, 2024, following an earlier approval of Bitcoin ETFs in January 2024.
ETFs are financial instruments that allow investors to gain exposure to a basket of securities. The approval of a crypto ETF is a major step in bridging the gap between traditional finance and the digital asset industry.
Unlike their counterparts in the US, the Korean Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have been cautious about introducing crypto asset trading on traditional securities markets.
According to the FSC, ETFs must adhere strictly to the Capital Markets Act, which stipulates that they must only be linked to traditional underlying assets. These assets include established financial instruments, securities, international currencies and commodities that form the basis of financial derivatives.
The Financial Services Commission is a government agency responsible for supervising and regulating financial institutions and financial markets in South Korea. The South Korean government issued a new amendment to the Virtual Property Consumer Protection Act in early February.
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According to a report by The Korea Times, Seoul-based major digital currency data provider Xangle has opposed a ban on digital assets in the traditional securities market, saying it needs reform to accommodate the ‘old' and growing importance of digital assets. Digital assets in modern finance.
“Under the circumstances, the SEC's decision on Thursday against Ethereum is expected to trigger Seoul's financial regulators to reconsider the rules on digital assets.”
Jung Yoo-jung, head of the Korea Shareholders Alliance, emphasized the importance of Seoul following the US example to approve bitcoin and ethereum ETFs, as the current hesitancy is creating frustrations that extend beyond the crypto sector.
Jung warned that investors could shift their money to the US market if Seoul's regulators continue to make little progress as the US moves forward, saying, “It's only a matter of time before the US fully opens its doors to other less-traded cryptocurrencies.”
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